Shuman Automobiles, Inc.
UNIVERSITY OF THE PHILIPPINES
Institute of Management
College of Social Sciences
SHUMAN AUTOMOBILES, INC.
RESPONSIBILITY ACCOUNTING
TRANSFER PRICING
Submitted By:
Ame, Donna Mae B.
Dela Pena, Melissa S.
Dulad, Jhune E.
Submitted to:
Sir Jay Stephen Siy
12 October 2006
CASE 22 1 : SHUMAN AUTOMOBILES, INC.
Responsibility Accounting & Transfer Pricing
Facts of the Case:
1. Clark Shuman, owner and general manager, plans to retire and relinquished his control over the company
2. Business has been doing good with an emphasis of selling new cars as the principal business of the dealership
3. He created three independent departments, namely new car sales, used car sales, and service department.
4. Salary is dependent on each department's gross profit
5. Upon the take over of the managerial positions, Janet Moyer of the new car sales had a first challenge of making a sale through a costumer who wanted to trade his old car with a new car.
6. Moyer had to decide the amount she would offer the costumer for the trade in value of the old car.
7. The new car model has been in stock for some time and the model wasn't selling.
8. The list price of the new car is $14400. List Price of New Car: $14400 Cost of the New Car: 12240
9. Paul Fiedler, the used car manager, estimated the reconditioning work to cost $840, and the car could be retailed at $7100 or wholesaled at $6100.
10. Blue Book price range of buying this model of car in good condition is from $5500 - $5800. Fiedler estimated he could sell the trade-in car at an auction as is at $5000.
11. If Moyer would sell the car without trade in, she will have to deduct about 8% from the list price, which makes the sales to $13,248.
12. Nate Bianci is charging the used car department for $2,000. Total cost of repair amounted to 1,594 and based on Blue book, charges for this kind of repair ranges from 1,960 2,040 and she has always aimed for the middle of the BB range.
Questions:
1. Suppose the new-car deal is
Institute of Management
College of Social Sciences
SHUMAN AUTOMOBILES, INC.
RESPONSIBILITY ACCOUNTING
TRANSFER PRICING
Submitted By:
Ame, Donna Mae B.
Dela Pena, Melissa S.
Dulad, Jhune E.
Submitted to:
Sir Jay Stephen Siy
12 October 2006
CASE 22 1 : SHUMAN AUTOMOBILES, INC.
Responsibility Accounting & Transfer Pricing
Facts of the Case:
1. Clark Shuman, owner and general manager, plans to retire and relinquished his control over the company
2. Business has been doing good with an emphasis of selling new cars as the principal business of the dealership
3. He created three independent departments, namely new car sales, used car sales, and service department.
4. Salary is dependent on each department's gross profit
5. Upon the take over of the managerial positions, Janet Moyer of the new car sales had a first challenge of making a sale through a costumer who wanted to trade his old car with a new car.
6. Moyer had to decide the amount she would offer the costumer for the trade in value of the old car.
7. The new car model has been in stock for some time and the model wasn't selling.
8. The list price of the new car is $14400. List Price of New Car: $14400 Cost of the New Car: 12240
9. Paul Fiedler, the used car manager, estimated the reconditioning work to cost $840, and the car could be retailed at $7100 or wholesaled at $6100.
10. Blue Book price range of buying this model of car in good condition is from $5500 - $5800. Fiedler estimated he could sell the trade-in car at an auction as is at $5000.
11. If Moyer would sell the car without trade in, she will have to deduct about 8% from the list price, which makes the sales to $13,248.
12. Nate Bianci is charging the used car department for $2,000. Total cost of repair amounted to 1,594 and based on Blue book, charges for this kind of repair ranges from 1,960 2,040 and she has always aimed for the middle of the BB range.
Questions:
1. Suppose the new-car deal is